On February 21, the Trump Administration released the America First Investment Policy (the memo or memorandum). The wide-ranging memo formally targets investment from the People’s Republic of China, including Hong Kong and Macau (collectively, the PRC), in sensitive U.S. sectors, modifies aspects of the Committee for Foreign Investment in the United States (CFIUS) process, and proposes new restrictions on outbound investment.
The memo reinforces a central theme behind other Trump Administration trade actions — “[e]conomic security is national security.” The memo seeks to “make the United States the world’s greatest destination for investment” while balancing “new and evolving threats” from foreign investment. We unpack some of the key takeaways below.
Targeting Chinese Investment
Investment from PRC-affiliated parties into sensitive U.S. sectors is squarely in the crosshairs of the Trump Administration. The memo indicates that (non-passive) PRC investment is unwelcome in critical sectors such as “technology, critical infrastructure, healthcare, agriculture, energy, raw materials, or other strategic sectors.”
The memo also broadly states that the Administration will establish new rules to “stop PRC-affiliated persons from buying up critical American businesses and assets, allowing only those investments that serve American interests.” While indicating that the United States continues to welcome purely passive investment from any foreign party, the memo also seems to formalize the well-established practice of viewing active investment from the PRC as inherently high risk.
Facilitating Ally and Partner Investment
Conversely, the Trump Administration also signals an increased receptiveness to investment from allied and partner countries. The memo proposes to create a new “fast-track” process “based on objective standards” for investment from certain allied and partner sources in “advanced technology and other important areas.” In addition, the memo indicates that resources will be “directed toward facilitating investments from key partner countries.”
That said, strings are attached. The “fast-track” process would include certain security requirements, such as ensuring “specified foreign investors avoid partnering with United States foreign adversaries.” This requirement may prove to be an important development. Depending on how the “fast track” mechanism is implemented, foreign firms may need to evaluate their own investments in and partnerships with PRC companies to take advantage of “fast tracked” investment in sensitive U.S. sectors.
In addition, investment restrictions will “ease in proportion to their verifiable distance and independence from the predatory investment and technology-acquisition practices of the PRC and other foreign adversaries.” This language seems to suggest that the intensity of CFIUS reviews will depend not only on the nationality of the party making the investment but on the relationship that a foreign person has with the PRC. While the factors for “verifiable distance and independence” remain unclear, foreign companies that intend to invest in the United States may consider reducing supply chain dependencies, investments, and technology transfers with PRC entities.
Expanded Scope of Outbound Investment Restrictions
The memo follows closely on the heels of Treasury Department regulations, which came into effect in January 2025, restricting outbound investment by U.S. persons in PRC and PRC-controlled entities in the semiconductor, quantum information technologies, and artificial intelligence sectors. While the Executive Order (EO) prompting those regulations targeted “countries of concern” generally, as a practical matter, the only country identified in this category was the PRC. More information about those regulations is available here.
The memo indicates that the outbound regulations may be expanded to target investment in additional Chinese sectors, such as “biotechnology, hypersonic, aerospace, advanced manufacturing, directed energy, and other areas implicated by the PRC’s national Military-Civil Fusion strategy.” In addition, the Trump Administration is considering restricting investment types such as “private equity, venture capital, greenfield investments, corporate expansions, and investments in publicly traded securities, from sources including pension funds, university endowments, and other limited-partner investors.” With a particular focus on universities, the memo underscores that “[i]t is past time for American universities to stop supporting foreign adversaries with their investment decisions…”
Reigning in Mitigation Agreements
The memo states that the “[Trump] Administration will cease the use of overly bureaucratic, complex, and open-ended ‘mitigation’ agreements for United States investments from foreign adversary countries.” This change may respond to industry critiques of the current structure of many mitigation agreements, which tend to impose ongoing compliance obligations and involve cumbersome third-party auditing and input. The memorandum states that going forward, mitigation agreements will “consist of concrete actions that companies can complete within a specific time.” This shift seems to imply that, if national security concerns raised by foreign investment are unable to be succinctly mitigated, CFIUS may be more likely to recommend that the transaction be blocked.
It is unclear whether the memo will trigger a review of current mitigation agreements. However, companies should be prepared to engage with administration officials, if necessary.
Agriculture and Food Systems Still on the Radar
Foreign investment in farmland and the U.S. food system has garnered bipartisan concern in recent years. In an EO released in September 2022, the White House directed CFIUS to consider, when reviewing covered transactions, “supply chain resilience and security…[in] technologies that are fundamental to national security, including…elements of the agriculture industrial base that have implications for food security.” We wrote about the September 2022 EO here. In addition, in March 2024, the U.S. Department of Agriculture was added as a CFIUS member on a case-by-case basis for agriculture-related transactions.
The memo continues this trend by targeting Chinese investment in U.S. agriculture, stating that the “United States will use all necessary legal instruments, including [CFIUS], to restrict PRC-affiliated persons from investing in United States…agriculture” and stating that the administration will “protect United States farmland” (among other sensitive real estate).
Implementation is Uncertain
It remains to be seen how future regulation will implement the America First Investment Policy. Even as the memo adopts a firm line on investment from the PRC, at his first cabinet meeting, President Trump seemed to welcome Chinese investment, saying, “we want [China] to come in and invest. I see so many things saying we don’t want China in this country. That’s not right…and we will invest in China.”
The memo also seeks cooperation from Congress to expand CFIUS’ jurisdiction over several key areas, including “over ‘greenfield’ investments, to restrict foreign adversary access to United States talent and operations in sensitive technologies (especially artificial intelligence), and to expand the remit of ‘emerging and foundational’ technologies addressable by CFIUS.” Obtaining Congressional action on these items will likely add to the timeline for, and complexity of, implementation.
Foreign companies interested in investment into sensitive sectors and U.S. firms seeking foreign investment should continue to monitor for regulatory and policy updates.
[Wiew source]
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